one of my friend gifted a machinery to my new started factory
how can account this machinery
Hi Sajeer,
We can account for the FA at nominal value of Rs.1 or 100.....
Hope this helps
Thanks
4 Replies
Z
( )
(2965 Points)
Replied 11 December 2018
As per the GAAP, there are 2 primary modes of accounting the assets received by way of gift.
As mentioned by Charan Raju Ji, we can show it at a nominal value of say 1 Rupee and simultaneously crediting capital reserve account by the matching amount.
Alternatively, we can show it at the fair value of the asset received and correspondingly crediting the capital reserve for the same amount.
I, personally, would recommend to record the asset and nominal value of Re 1 and then to revalue the asset at the fair value and crediting the matching amount to the P&L.
This method increases your P&L A/C, which looks good. [It will not have tax effect, per se.]
Rakesh Mishra
(Asst. Auditor)
(42 Points)
Replied 29 April 2019
Plz pass this entry for the a/cing purpose.. Assets a/c dr. To capital a/c
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